Political Economy, Political Theory and History

Rational Irrationality and Capitalist Technocracy

The most recent exposition of the neo-liberal attack on democracy was published at the outset of what Wolfgang Streeck has called the current ‘crisis of democratic capitalism.’[1] In The Myth of the Rational Voter, Bryan Caplan firmly embeds the neoliberal pursuit of free market capitalism within a Platonic critique of the irrationality of the masses and the subsequent dangers of democracy.[2] Arguing against the accumulated presumptions of his own economics profession – that is, that individuals are fundamentally rational and self-interested, Caplan turns to the work of contemporary behavioural psychologists as well as classical ‘elite theorists’ like Le Bon, Mosca and Schumpeter to argue that ‘lay people’ suffer from ‘systematic biases’ that result in systematic errors at the ballot box. Caplan’s thesis is that the general public is economically illiterate and suffers from a number of ‘systemic’ biases: anti-market bias, make-work bias, anti-foreign bias, and pessimistic bias. According to Caplan, the evidence suggests that those not versed in economics believe that protectionism is good; they believe that it is better to employ labour than to ‘save’ it through the implementation of labour-saving technology; they believe that immigrants steal their jobs and that multinational corporations ship jobs overseas to low wage labour markets; and they generally think that economic life is getting worse.[3]

One of the fundamental assumptions of the book that goes uncontested is that economists are ‘right’ about the economy and the median voter is ‘wrong’. A second dubious claim is that ‘education’ increases the tendency of voters to think more like economists (except in the instances where that education does not amount to taking economics courses). The upshot of the argument is that most voters lack the requisite knowledge to vote rationally for the ‘public welfare’ (whatever that is). According to Caplan, ‘lay people’ vote not out of self-interest, but out of a desire to ‘feel good’. There is much that can be said of the shaky evidentiary basis of Caplan’s argument, and I have dealt with much of it in previous posts (here and here). What is significant from the perspective of the argument put forth here is the way in which Caplan’s book operates as a piece of ideology, for he resituates the neoliberal exaltation of capitalism against democracy within an ideologically loaded assault on the rationality of the masses themselves. Caplan dispenses with the argument, familiar amongst the practitioners of rational choice, that politics is like a market, and voters ‘shop’ for the best policies. While individuals may be rational market actors, they become irrational when engaged in politics because they lack the incentives to act rationally. Democracy is a commons, argues Caplan, not a market. Whereas the neoliberalism of Hayek and the public choice theory that followed on the work of economists like Downs, Arrow and Buchanan were all aimed at the technocratic politics of welfare state elites, the ‘libertarianism’ of Caplan is designed to promote the rule of a new capitalist technocratic elite against the masses themselves.

The problem with democracy, according to Caplan, is not that it is being subverted by elites or by ‘sinister interests’; rather, the problem with democracy is that it ‘works’ the way it is designed to. Democracy results in bad policies because it empowers the economically illiterate who suffer from the systematic biases outlined by Caplan – his standard definition of irrationality. Those who claim otherwise suffer from ‘democratic fundamentalism’; that is, the belief that democracy is the cure for all political problems. An example of such democratic fundamentalism, says Caplan, is the work of democratic theorists like Ian Shapiro. Caplan takes issue with the way that Shapiro support for democracy denies the existence of ‘political expertise’:

It would be foolish not to recognize that economists, for instance, often have esoteric knowledge (perhaps less than they think they have) about the workings of the economy that is relevant to democratic deliberation about it. But because decisions about the limits of the market sphere and the structure of its governance are linked to the controversial exercise of power, they are inescapably political; thus economic policy making should never be ceded to professional economists. They must persuade lay representatives, in non-technical terms, if we are to be bound to their advice.[5]

What Shapiro is doing here is critiquing the false reduction of political knowledge to some sort of non-normative technical knowledge, equivalent to mechanics or engineering. The idea that the kind of political knowledge necessary to participate in the processes of self-government is a specialized form of technē goes back to Plato’s engagement with Protagoras. For Plato, politics was governed by notions of justice, and justice itself was equivalent to other forms of craftsmanship. In Republic, he noticeably equates it to husbandry and horse-training. In doing so, he takes a form of contestable, moral knowledge and reduces it to a form of objective technique. From here it is easy to exclude those who lack political expertise from having any role in the process of government. Shapiro, like most democratic theorist, reject this line of argument as a form of sophistry; and in the case of Shapiro, he extends this critique to economics. While recognizing that economics has some technical knowledge of the economy, Shapiro argues that much of its claim to ‘knowledge’ refers to highly contested notions of power. In this regard, it is comprised of political and moral questions that make it similar to political knowledge. For Caplan, Shapiro’s position amounts to nothing other than ‘democratic fundamentalism’, because economics is an objective form of knowledge that merely reflects a reality that is independent of our perception (and arguably, our agency). At the hands of Caplan, economic ‘knowledge’ is de-contested, turned into a consensus, and accorded the same status of absolute truth that Plato bestowed upon philosophy.

For Caplan, the alternative to democracy and dictatorship is the expansion of the sphere of depoliticized individual market choice. This is because, as Caplan claims to have shown, average people are irrational in the political sphere while they are rational in the economic sphere; politicians unfortunately respond to systematic voter bias, and as a result, bad policies are produced.[6] The task then, is to expand the sphere of individual market choice in ways that restrict the sphere of, and diminish the capacity for, collective democratic decision-making. Unfortunately, says Caplan, the idea of requiring literacy tests will not prove acceptable to most voters despite being – according to him – no more objectionable than a driving test.[7] The more palatable option for Caplan is to bring in plural voting for those with ‘economist training’, or who at least think like economists. Another ‘moderate’ reform proposed by Caplan is to eliminate efforts to increase voter turnout given his belief that the uneducated are less likely to vote anyway, so ‘we’ might as well discourage them from voting in order to lower the irrationality of the median voter. We are not very far from the kinds of voter suppression acts common amongst the pro-market right-wing of American politics.

It is not enough, however, to merely rig the rules of the electoral game to ensure the marginalization of what liberals in the nineteenth century referred to as the ‘class legislation’ of the working classes. The socialization of the masses in the truisms of free market economics also needs to be arranged in order to increase the number of ‘rational’ voters. Useless subjects like the classics (and one would plausibly guess, fine arts, history, and English literature) and abstract mathematics need to be downgraded in status in favour of more useful or ‘worldly’ subjects like statistics and economics, because both of these are represent ‘objective’ reflections of reality. Economists must also become proselytizers who choose to simplify answers that will have clear policy implications rather than ‘disinterested’ academics who present the complexities of reality that may be rather ambiguous. One could say that this is privileging impact over accuracy (impact over truth), but Caplan clearly doesn’t see it that way. For Caplan, the trade off between impact and accuracy (or one could say impact over truth) is an acceptable one in order to rear a new generation of voters who have internalized the ‘truths’ of the economics profession. This is a rather extraordinary section of the book, because essentially Caplan is encouraging economists to spend more time inculcating students with the ‘general principles’ of free market economics and less time with the empirical details that tend to qualify the truth content of those general principles. For example, Caplan states that too many economists qualify the virtues of the market by stating that market only work efficiently under conditions of perfect competition. Such qualifying details water down the message for Caplan, who claims that ‘like competitive firms, monopolies have an incentive to reduce costs, cut their prices when costs fall, and look over their shoulder for potential competition.’[8] For Caplan, it is ‘more important for students to understand that self-interest often encourages socially beneficial behaviour, than to understand that this mechanism falls short of perfection.’[9] The point is that bringing in the complex empirical details to qualify the general principles of economics does not do enough to eliminate the systemic biases that Caplan associates with the median voter. Better to give them the simplified and sanitized ‘truth’.

The parallels here, at least in principle, with Plato’s educational program are quite striking. ‘Rationality’ is encouraged not through critical thinking, debate or a questioning of the means by which economic ‘truths’ are arrived; rather, rationality is established through intensive socialization that privileges the ‘truths’ of general principles over the inconvenient truths of a complex empirical reality. Economic theory becomes the new noble lie.

[3] As a side note, the book was published in 2007, so the last point may not be too far off the mark. A panegyric to neoliberal capitalism published at the very outset of the greatest economic crisis since the Great Depression tends to raise a number of questions regarding the expertise of the economist.